Goldman Sachs upgraded Tyler Tech (NYSE:TYL) to Buy from Neutral with a price target of $424.00, noting it finds the resilience of the government end market attractive in the next 12 months due to macro volatility and a less predictable enterprise software outlook. Shares gained more than 3% today.

The analysts also see positive catalysts for the stock, including 2023 being a trough year for margins due to the ongoing shift from on-premise to cloud. The analysts predict that Tyler's transition to a cloud-first model will speed up sales cycles and R&D efficiency, resulting in over 800bps higher operating margins after the cloud transition.

The analysts expect that Tyler's Analyst Day and the introduction of a 2030 model will provide investors with visibility on this matter.